Cardano (CRYPT: ADA) is a blockchain platform that has aimed high, with the goal of making the world work better for everyone and redistributing power to the margins. ADA tokens are its native cryptocurrency, which is used to pay transaction fees on Cardano. They can also be wagered for rewards.
Like its rival Ethereum (CRYPTO: ETH), Cardano has smart contract functionality. Developers can use it to build decentralized applications (dApps) and large decentralized financial platforms (DeFi).
Cardano presents itself as a platform for changemakers, innovators and visionaries. In this guide, we’ll take a closer look at what it does and how it performs as an investment.
What makes Cardano unique?
The main difference between Cardano and other cryptocurrencies is the fact that it relies on peer-reviewed research and evidence-based methods for its development. While most cryptocurrencies are moving fast, Cardano is moving in the opposite direction. See the article: Ethereum does not exceed $ 3,000, can the bulls get there?. Take a slower, more methodical approach. The benefit is that developers have a better chance of detecting potential threats.
However, Cardano’s approach has drawbacks. Its development process tends to take much longer than its competitors, which can cause it to lag behind. Critics have also pointed out that the current peer review system has its own problems and relying on it isn’t necessarily an advantage.
Cardano cryptography is also unique in that it uses a proof-of-stake protocol to validate transactions. Proof of participation is much more energy efficient than proof of work, the original consensus mechanism introduced by bitcoin (CRYPTO: BTC).
Many cryptocurrencies now use proof of stake, but, for a time, Cardano was the largest. This helped it develop a reputation as a green cryptocurrency compared to cryptocurrencies that used proof of work.
Where does Cardano come from?
Charles Hoskinson, co-founder of Ethereum, began developing the Cardano cryptocurrency in 2015. He had decided to leave Ethereum a year earlier due to a dispute with fellow co-founder Vitalik Buterin. On the same topic: Do not miss the pre-sale of Quitriam Finance (QTM) after the success of Filecoin (FIL) and Tezos (XTZ). Hoskinson wanted to make Ethereum a for-profit company and accept venture capital, while Buterin wanted it to remain a non-profit organization.
Together with his former Ethereum colleague Jeremy Wood, Hoskinson created the blockchain engineering firm IOHK. This company, the Cardano Foundation and EMURGO are responsible for the development of Cardano.
Cardano was launched on September 27, 2017. It takes its name from the multifaceted Italian Gerolamo Cardano. Its native token, ADA, is named after math Ada Lovelace.
How does Cardano work?
Cardano validates blockchain transactions with a proof-of-stake protocol called Ouroboros. With the proof-of-stake protocol, any token holder on a blockchain can create their own network node and become a validator. This might interest you: Solana Price Prediction: Here’s How SOL Crypto Can Reach $ 50 Soon!. To do this, they have to stake their crypto tokens, which means they commit their tokens to the blockchain.
For each block of transactions to be verified, the Ouroboros protocol pseudo-randomly selects a validator node. The selections are based in part on the amount of ADA chips the node has wagered. The more ADA chips you wager, the more likely you are to get picked.
After a validation node confirms a block of transactions and adds it to the blockchain, it receives the block reward. Bulk rewards are paid out in ADA tokens, which incentivizes token holders to wager.
Since peer review is an important part of Cardano, it’s important to know what it means. Before Cardano integrates a new technology, it is researched and that research undergoes peer review. Cardano’s research team includes leading academics and explores a wide range of fields, including philosophy, sociology, behavior and game theory.
Cardano has established a series of interesting collaborations over the years. Here are some of the most prominent examples of these partnerships and Cardano’s role in each:
Can i earn passive income with Cardano?
You can earn passive income by betting on Cardano. Because it uses proof of stake to validate transactions, anyone who puts their ADA tokens into play can earn rewards.
There are two ways to do this. The simplest option is to use a cryptocurrency exchange that offers cryptocurrency staking. After purchasing ADA tokens, you can stake them directly from your account. Here are some exchanges that support Cardano staking:
Another option is to stake Cardano alone through your blockchain wallet. It takes a little more work, but you will likely get a better yield. To do this, you need to transfer your tokens to a wallet that supports Cardano staking. Two popular options are Daedalus and Yoroi Wallet. Then you can choose a staking pool and stake your Cardano.
Remember that the passive income you earn will be paid in ADA tokens, not cash. This means that the value of your earnings will depend on the price of Cardano.
Research addiction is a key part of Cardano, but it can also be a downside. While Cardano is still in the research phase, this offers competitors the opportunity to gain larger market share.
For example, despite launching in 2017, it wasn’t until September 2021 that Cardano launched smart contracts. They too have had problems from the start. The first dApp, a multi-exchange called Minswap, had to be closed due to transaction processing issues.
At this point, Ethereum had been using smart contracts for years, which helped make it the blockchain with the most dApps. Another competitor, Solana (CRYPTO: SOL), also beat Cardano, although it wasn’t launched until 2020.
To its credit, the Cardano ecosystem has grown steadily. It now has decentralized exchanges, NFT markets, blockchain games, and more.
Is Cardano a good investment?
Cardano could be an attractive investment for patient investors who can handle volatility.
As a blockchain platform, Cardano has a lot of potential. It is environmentally friendly and can be used for all kinds of applications, including DeFi and NFT. So far it has established excellent partnerships that demonstrate the different uses it offers. You can also go for Cardano to earn more ADA tokens which is an added bonus if you buy it.
However, the lengthy development process could be problematic and Cardano also encountered performance issues, including severe congestion in early 2022. These are things to consider when deciding whether to invest.
While long-term investing is always a smart way to go with digital currencies and cryptocurrency stocks, it’s especially important with Cardano. This project has a slow and steady approach, so you need to give it time to develop.
Even though Cardano works differently than other cryptocurrencies, it is still very volatile. Its price can undergo significant changes in a short time. If you decide to invest, remember that long-term changes are more important than weekly fluctuations.
Be vigilant and consult your financial advisor before making any investment decisions. Mirror-Mag cannot be held responsible in case of bad investments. Before using any third party service, you should do your research.